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Yellen Takes the Stand

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With Ben Bernanke termed out on January 31, 2014, nothing much is expected to change with accommodative Federal Reserve monetary policy. Yesterday, Federal Reserve Vice Chairman Janet Yellen came forward before the U.S. Senate Banking Committee for her confirmation hearing. Political theater played in the background as some policymakers tried to act tough with the Fed Chairman nominee. Already holding the #2 slot at the Federal Reserve, Yellen’s confirmation is all but a shoe-in. However a Republican senator on the committee, David Vitter of the state of Louisiana, plans to oppose her. Earlier in November, Senator Vitter took a stand speaking out against the Federal Reserve’s bond buying program.

Magic bullet measures such as bond buying and asset purchases by the central bank will likely continue.

In 2008, the Federal Reserve played their QE card and moved to bring interest rates to zero. Yellen reiterated the only thing to do is to “to do everything possible to promote a very strong recovery.” With ease, Yellen demonstrated that the overall risk is worth the unintended consequences of quantitative easing, playing down the notion of asset bubbles forming in various markets. With boldness, she indicated a continuation of the Federal Reserve’s extraordinary monetary stimulus under her watch. Magic bullet measures such as bond buying and asset purchases by the central bank will likely continue. Money managers are happy Yellen is in the chair, as equity markets would tank with a less dovish central bank head.

Asset owners such as U.S. pensions face dire consequences due to the Fed’s accommodative policies. Encouraged risk-taking and speculation into asset classes such as life settlements, re-entering the CMBS market and illiquid assets proliferated in Pensionland.

Japanese Government Capital Provides Initial Life for Texas Bullet Train

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Dallas-based Texas Central Partners, LLC is the developer of a proposed high-speed rail system, dubbed the Texas Bullet Train, between Dallas and Houston. Project costs are estimated between US$ 12 billion to US$ 15 billion. The developer secured US$ 300 million in project loans from Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN) and the Japan Bank for International Cooperation (JBIC). [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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DOJ Investing Tesla Over Musk Comments

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The U.S. Department of Justice (DOJ) is conducting a fraud investigation over Tesla as its CEO Elon Musk made public statements on twitter. This is a criminal probe. In addition, earlier, SWFI reported the U.S. Securities and Exchange Commission (SEC) is conducting a civil inquiry into Elon Musk regarding his statements.

This all surrounds Musk tweeting in August that he was thinking of taking Tesla private and had “funding secured” for the transaction. Both government authorities are seeing if Musk misled investors and violated federal securities laws with his public statements.

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Marsh & McLennan Companies to Acquire JLT Group

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Marsh & McLennan Companies, Inc. (MMC), a global professional services firm offering clients advice and solutions in risk, strategy and people, announced that it has reached an agreement to acquire Jardine Lloyd Thompson Group plc (JLT), a provider of insurance, reinsurance and employee benefits related advice, brokerage and associated services. The transaction has been approved by the Board of Directors of each of MMC and JLT. JLT’s largest shareholder, Jardine Matheson Holdings, and JLT directors who collectively represent 40.5% of the issued and outstanding JLT shares in support of the transaction.

[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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